Staykova, K. S. and Damsgaard, J. 2017. “Toward an Integrated View of Multi-Sided Platform Evolution”. In: Proceedings of the International Conference on Information Systems (ICIS) 2017, Seoul, South Korea. This exploratory paper seeks to review the existing platform literature in order to understand how researchers portray the evolution of digital platform ecosystems. The initial assumption is that the lack of clear conceptualization of digital platform ecosystems (see de Reuver et al., 2017) spills over to studies on evolution.
57 Thus, we embarke on a study to unravel the existing conceptualizations of digital platform ecosystem evolution by identifying how scholars view and portray this process.
To conduct our investigation, we adopt a concept reconstruction method (Welch et al., 2016), which consists of reviewing the usage of the digital platform ecosystem evolution as a concept in the existing literature and supplementing this analysis with empirical exploration of the evolutionary process of several digital platform ecosystems. The purpose of the hermeneutic literature review, which encompassed 98 different studies across various fields of research reflecting the different views within the platform literature, is also to deduct a number of attributes, which collectively construct the concept in question (namely, digital platform ecosystem evolution). To check the accuracy with which the identified attributes capture the evolutionary process, we further conduct an empirical investigation by reconstructing the evolutionary path of three exemplary digital platform ecosystems.
Based on the conducted literature review, we confirm our initial assumption that there is a lack of common understanding about what constitutes digital platform ecosystem evolution. Rather, various scholars conceptualize this phenomenon in various manners (we identify twelve different views), which instead of informing our knowledge about the phenomenon, fragment even further our understanding of this complex process. Further, when investigating whether the existing views capture accurately the evolution of the selected digital platform ecosystems, we found that none of the identified views (and its corresponding attributes) could explain the evolutionary process in its entirety as they rather focus on investigating separate, often disconnected topics.
To amend this, we integrate the different views and propose a new conceptualization of digital platform ecosystem evolution as co-evolution of platform constituencies, infrastructure, functionalities and governance regime, which we synthetize from the existing literature (Figure 9)6. Thus, we argue that all digital platform
ecosystems consist of certain attributes (constructive elements), which co-evolve during the evolution of the ecosystem. We further propose, based on the hermeneutic literature review, that various drivers propel the co- evolution of constituencies, infrastructure, functionalities and governance regime towards certain evolutionary outcomes (Figure 9). Drivers and evolutionary outcomes, however, remain under researched topics within the literature on digital platform ecosystem evolution (for more details, see Paper II).
In subsequent studies, I largely build on this initial conceptualization of digital platform ecosystem evolution. As my research advanced, I have further clarified the nature of the digital platform ecosystem (see Chapter II) and have improved the conceptualization of the evolutionary process (see Paper II; also Chapter VII).
58 Figure 9. Conceptualization of Digital Platform Ecosystem Evolution
2.
Paper II
Staykova, K., S., Mathiassen, L., Rai, A., and Damsgaard, J. (2018). “Generative Mechanisms for Digital Platform Ecosystems Ecosystem: A Punctuated Equilibrium Theory”. Paper re-submitted (revise and resubmit) to Research Policy’s special issue on Digitization of Innovation and Entrepreneurship.
The purpose of this paper is to advance the existing literature on digital platform ecosystem evolution by addressing an important, yet under researched question, namely how generative mechanisms lead to certain evolutionary outcomes when triggered in response to various internal and external challenges. To this end, the paper combines the notion of generative mechanisms with Punctuated Equilibrium Theory to theorize how and why digital platform ecosystems evolve over time.
Based on extensive literature review, we first group existing studies on evolution in three different perspectives (growth, co-evolution and competition)7 and outline research gap. Despite the merits of current research, scholars have overlooked two important aspects: the triggers, in response to which a digital platform ecosystem evolves, and the generative mechanisms, which shape the evolutionary process. Thus, this paper investigates the following research question: How do triggering events and generative mechanisms drive the evolution of digital platform ecosystems?
7The categorization of the different perspectives follows loosely the categorization of the literature in Chapter III.
PE Process Platform Attributes Constituencies Functionalities
Infrastructure Governance PE Attributes (e.g.)
New types of constituencies Size growth of constituencies (initial growth, critical mass, optimal growth
rate, entry in geographical markets) PE Attributes (e.g.) Capabilities, technical boundary resources, new channels, acquisitions,
suppliers
PE Attributes (e.g.) Type of features: core, complementary,
spin-off products Feature providers: MSP owner,
complementors PE Attributes (e.g.) Pricing (business model evolution) Non-pricing (communities, affiliation, social
boundary resources, etc.) PE Drivers (e. g.)
Environment Change Internal Optimization
PE Outcome Platform Maturity (e.g.) Market Size, Optimal Growth Rate
59 To this end, we combine the notion of generative mechanisms with Punctuated Equilibrium theory to offer a conceptualization of the digital platform ecosystem evolution, which later we use to guide the empirical analysis of the selected case study (see Table 7). Building upon Punctuated Equilibrium Theory, we present the existing configuration of actors, architecture and governance as the deep structure of a digital platform ecosystem, which maintains its composition during periods of stability. Various external and internal events, which appear during the evolution of a digital platform ecosystem, challenge the established configuration, thus prompting it to alter. Not all occurring events, however, constitute change triggers. For an event to qualify as a change trigger, it needs to create a misfit within the digital platform ecosystem or between the ecosystem and its environment, which undermines the overall performance of the ecosystem (see Table 7).
The change triggers can set in motion one or more generative mechanisms, which are rooted in the latent properties of the deep structure and thus relate to one or more of the ecosystem’s actors, architecture and governance. When triggered, the generative mechanisms, through the interplay of the activated components (e.g., actors and architecture or architecture and governance) lead to a change outcome, which affects the existing composition of the deep structure. We further distinguish between two types of generative mechanisms, depending on their impact on the digital platform ecosystem. While transformative generative mechanisms lead to radical change in the deep structure of a digital platform ecosystem, reinforcing generative mechanisms introduce incremental adjustments to the existing composition. Subsequently, we conceptualize the evolution of digital platform ecosystems as the ongoing changes (transformative or reinforcing) in relation to its actors, architecture and governance (see Table 7).
Table 7. Conceptualization of Digital Platform Ecosystem Evolution
Platform Evolution
The ongoing changes in a digital platform ecosystem in relation to its actors, architecture and governance
Deep Structure
A sustained configuration of actors, architecture and governance during a stable period of ecosystem evolution
Change Trigger
An external event that challenges the current configuration of the ecosystem or an internal event that creates a misfit between the configuration of the
ecosystem and the environment, thereby challenging the performance of the ecosystem
Generative Mechanism
Latent deep structure properties (related to one or more of a platform
ecosystem’s actors, architecture and governance) that can be activated to change the ecosystem.
Transforming Mechanism
Mechanism that leads to radical change in the deep structure of a digital platform ecosystem
Reinforcing Mechanism
Mechanism that leads to incremental adjustment of a digital platform ecosystem without affecting its deep structure
Change Outcome
A change in the properties of a digital platform ecosystem (related to one or more of its actors, architecture and governance) in response to a change trigger
60 Next, we applied the above conceptualization to investigate empirically the evolution of a prominent digital payment platform ecosystem, MobilePay (four years in total). Relying on a longitudinal single case study (see Paper II and Chapter V), we validate the suitability of the proposed theoretical framework and derive a number of insights.
To develop further a Punctuated Equilibrium Theory about digital platform ecosystem evolution, we combine the theoretical framework (Table 7), the insights from our empirical analysis and extant theory. As a result, we argue that digital platform ecosystems evolve through a network of distributed and concurrent generative mechanisms, which transform and reinforce the deep structure of the ecosystem in response to internal and external events and other mechanisms.
We attribute the triggering of digital platform ecosystem evolution to both internal and external events (consistently with existing platform literature, see Chapter III). While we identify additional triggers to complement the existing ones, we also discover that both internal and external events trigger transformative mechanisms, while mainly internal events set reinforcing mechanisms in motion. We also establish that already activated generative mechanisms can serve as a trigger to subsequent transformative and reinforcing generative mechanisms. Transforming mechanisms can trigger one or more subsequent reinforcing mechanisms, while reinforcing mechanisms can also trigger other reinforcing mechanisms. We also found that reinforcing mechanisms can indirectly trigger transforming mechanisms (for examples, see Paper II, Discussion).
We further illustrate the context dependency of the generative mechanisms by emphasizing on their anchoring in the latent properties of the existing deep structure, which itself is a result of previously activated generative mechanisms, and on their triggering events. When a change trigger appears, it activates certain latent properties of the existing deep structure configuration, which also manifest into a generative mechanism. For example, as MobilePay opened for third-party complementors (transforming mechanism) through the release of boundary resources, the platform became more malleable as a latent property of the ecosystem architecture (Henfridsson and Bygstad, 2013). This malleability subsequently resulted in adoption of the platform by other third-party complementors (reinforcing mechanism).
We also propose a typology of generative mechanisms based on two aspects: their dominance and their impact (see Table 8). The dominance of a generative mechanism signals for their different change focus in terms of actors, architecture and governance. Regardless of their dominance, the change outcomes brought by generative mechanisms can have transforming or reinforcing impact on the existing deep structure of the ecosystem. Based on our empirical analysis, we identify a number of generative mechanisms, which we present in an abstracted form in Table 8.
61
Table 8. The Dominance and Impact of Generative Mechanisms
Impact
Transforming Reinforcing
Dominance
Actor Changing actor types Shifting owners
Changing actor populations* Changing the role of platform
owner Architecture Extending platform core Including boundary resources Developing platform periphery Renewing platform core Leveraging existing IT solutions* Introducing incremental innovation in platform core* Optimizing functionalities in
platform core* Improving platform
connectivity for actors*
Governance
Developing governance regime
Customizing rules for actor types
Improving affiliation process Tightening and relaxing
participation rules*
Adjusting value appropriation rules
Finally, we ponder upon the temporality of generative mechanisms as they appear (and disappear) throughout the evolution of a digital platform ecosystem. In particular, we found that multiple transforming and reinforcing mechanisms operate simultaneously and interact to drive the evolution of the ecosystem. While transformative mechanisms stop operating at some point in time, we found evidence that a number of reinforcing mechanisms (market with * in Table 8) continue to operate throughout the digital platform ecosystem evolution.
Interestingly, and in contradiction to Punctuated Equilibrium Theory, which prescribes clear-cut periods of stability and instability, we observe that the transforming mechanisms could span across considerable periods, thus overlapping with other generative mechanisms. We attribute this difference to the socio-technical nature of generative mechanisms, with various actors and artifacts involved in their activation and operation, to the complexity of change brought by transforming mechanisms, and to the fact that independently of transformative mechanisms, reinforcing mechanisms continue to operate, as digital platform ecosystems evolve not only discontinuously but also cumulatively along multiple dimensions.
3.
Paper III
Staykova, K. S., Mathiasen, L., and Holmstrom, J. (2018). “The Dialectics of the Digital Platform Ecosystem Evolution”. Paper under development.
In this paper, we investigate digital platform ecosystems evolution by adopting Dialectics as theoretical lens (Figure 10). As multiple tensions occurring, for example, between platform owner and other actors or between
62 ecosystem growth and the need to maintain its efficiency characterize digital platform ecosystems (see Hagiu, 2014; Eaton et al., 2015; Wareham et al., 2014), we investigate how their appearance and resolution drive the ecosystem evolution. Subsequently, the main research question of this paper is: How do tensions within the digital platform ecosystem drive its evolution?
Figure 10. Dialectical Model of Digital Platform Ecosystem Evolution
To this end, we build upon Dialectics theory (Figure 10, outer circle) and combine its key constructs with insights we obtain from reviewing the relevant platform literature (Figure 10, inner circle). As a result, we propose a Dialectical theory of digital platform ecosystem evolution (Figure 10). In particular, we present the digital platform ecosystem as interconnected totality consisting of certain configuration of actors, architecture and governance8. We further argue that various inherent contradictions, characterize a particular configuration of ecosystems actors, architecture and governance as part of its latent properties (see Paper III). After reviewing the existing platform literature, we summarize these inherent contradictions in four categories, namely performance, architecture, governance, and development, with each contradiction consisting of identity and two opposites (see Table 9).
8Consistent with the conceptualization of digital platform ecosystems as deep structure in the Punctuated Equilibrium theory of
digital platform ecosystem evolution (Paper II).
Digital Platform Ecosystem Actors Architecture Governance Latent Tensions Performance Architecture Governance Development Salient Tensions Managerial Response Accommodating Splitting Synthesis
63 Table 9. Inherent Contradictions in Digital Platform Ecosystem Evolution
Contradiction Identity Opposites
Performance
A digital platform ecosystem must direct resources to ensure
appropriate contributions to its participants
Opposite: Efficiency forces seek to improve performance through fine tuning of the existing ecosystem configuration
Opposite: Growth forces seek to improve performance through strengthening network effects from new ecosystem participants
Architecture
A digital platform ecosystem must design and maintain the platform to serve current and future needs of its participants
Opposite: Reliability forces seek to improve the capability of the platform architecture to serve the current needs of ecosystem participants
Opposite: Evolvability forces seek to improve the capability of the platform architecture to serve the future needs of existing and new ecosystem participants
Governance A digital platform ecosystem must enable the access and support the practices of its participants
Opposite: Control forces seek to introduce mechanisms that drive alignment of platform ecosystem participants and their practices Opposite: Openness forces seek to
introduce mechanisms that drive platform ecosystem renewal through new participants and emerging practices
Development A digital platform ecosystem must respond to internal and external events that challenge its status quo
Opposite: Consolidation forces seek to respond by reinforcing the current trajectory of the digital platform ecosystem
Opposite: Adaptation forces seek to respond by transforming the current trajectory of the digital platform ecosystem
When triggered by various factors of plurality, change and scarcity (see, Smith and Lewis, 2011), these inherent contradictions transform into salient as various ecosystem actors become largely aware of them. As a result of their activation, the platform owner, as a key ecosystem actor with asymmetrical power (Boudreau and Hagiu, 2009), aims at addressing the tensions often by engaging with other ecosystem actors, who may also react to drive or resolve the tension (praxis) (see e.g., Eaton et al., 2015).
64 Depending on the nature of the tensions, a platform owner can choose from three different types of responses, namely accommodating, splitting, or synthesis (Van de Ven and Poole, 1995). While accommodating implies that the platform owner tries to manage simultaneously the two opposites of a contradiction, the splitting occurs when the owner separates the two opposites in time and space (Van de Ven and Poole, 1995). When the two opposites cannot co-exist, the platform owner transforms the contradiction through synthesis. Our empirical investigation of the relevant platform literature demonstrates that the platform owner can adopt a combination of these three response strategies when addressing various salient tensions (for more details, see Paper III). Subsequently, the resolution of salient tensions can lead to reconstruction of the existing ecosystem configuration (see Figure 10).
4.
Paper IV
Staykova, K. S. and Damsgaard, J. 2016. “Adoption of Mobile Payment Platforms: Managing Reach and Range”, Journal of Theoretical and Applied Electronic Commerce Research, 11(3), pp. 65-84.
This paper aims at investigating specific strategies adopted by the platform owner as part of the evolution of a digital platform ecosystem. In combination with Paper V and Paper VI, it provides additional insights into how a platform owner can manage the evolution of a digital platform ecosystem. In particular, this paper asks the following research question: What strategies do platform owners adopt to drive the adoption and expansion of digital platform ecosystems?
After reviewing the platform literature, we found that different strategic challenges appear at different stages of the evolutionary process. While initially platform owners are preoccupied with the task of achieving critical mass of participants, new challenges arise as the platform ecosystem evolves, such as ensuring continuous growth and use, establishing viable business model, creating and maintaining generativity, and more. To cope with these challenges, which in this research relate mainly to ecosystem actors, we propose that platform owners should manage carefully the reach and range of their platform ecosystems. To this end, we construct the Reach and Range framework, which can serve as a strategic tool for platform owners to address a number of strategic challenges they face throughout the evolution of their platform ecosystems.
Reach 3 2 Rang e 1 Interside I II Reach Rang e Platform
65 Figure 11. Overview of Reach and Range for Two-Sided Platforms
In particular, we argue that each of the distinct groups of actors is characterized by reach, which refers to number of participants, and range, which refers to the functionalities associated with particular group of actors (Figure 11). As additional distinct groups of actors (e.g., developers) join the ecosystem, the platform owner also needs to manage the interside reach and range occurring between the distinct groups of actors under the influence of cross-side network effects. Thus, managing ecosystem actors requires the careful balance between the reach and range of each distinct group and the interside reach and range between distinct groups of actors. To identify specific strategies used by platform owners when addressing emerging challenges, we apply the Reach and Range framework to three selected digital payment platform ecosystems. Based on our empirical investigation, we prescribe a number of strategic recommendations that can assist platform owners in their quest to spur adoption and subsequent evolution (see Table 10). In particular, we demonstrate how platform owners can leverage the Reach and Range framework to design specific strategies addressing various challenges as they occur during the evolutionary path of their digital platform ecosystems.
Table 10. Reach and Range Framework for Strategic Challenges
Platform Type
Strategic Challenge
Reach and Range Framework
Examples
MobilePay Pingit Swish
One-Sided Achieve critical mass of users Build Reach All banks’ customers All above 16- years old All participating banks’ customers Limit Range P2P P2P P2P Two-Sided Adoption on the second group of participants Build Reach SMEs Large merchants Webshops Sole traders Large merchants SMEs Charities Webshops Diversify Range NFC Bluetooth Business Online Buy It button
Pay now with Pingit button